Financier provides R175m cash relief to settle 50% of taxi drivers’ and owners debt
CAPE TOWN – Minibus taxi financier Bridge Taxi Finance has announced that it would be providing financial relief to taxi drivers and owners in the form of a R175 million cash injection directly into their clients’ pockets.
With the support of its holding company Mokoro Holdings and shareholders, Bridge Taxi Finance said on Monday that its had taken the bold decision to settle up to 50 percent of its clients’ monthly finance installments on their behalf throughout the lockdown period.
“Rather than offer clients the false assistance of a so-called payment holiday, which would increase their indebtedness after the Covid-19 lockdown, Bridge Taxi Finance is ensuring that its clients will be able to survive the lockdown and thrive once they are able to operate again without the added burden of increased debt,” the company said in a statement.
Several lenders are offering a payment holiday, a feature that allows entities to miss monthly payments agreed in advance. Interest, however, still accrues on your loan thus, when the payment holiday ends, your outstanding balance and payments may be higher.
Although this facility may have been around for a while, it came into the spotlight as one of the economic support measures announced in the midst of the Covid-19 pandemic.
Bridge Taxi Finance chairperson, Vincent Raseroka said: “Instead of a payment holiday, we have chosen to rather direct R175 million straight to clients, effectively paying off their interest. This direct cash injection equates to a benefit of over R450 million in interest over the credit lifetime on the accounts of the customers currently on our books.”
Raseroka said this was in line with Bridge Taxi Finance’s founding policy to provide affordable, cost-effective finance for the most highly visible form of entrepreneurship in South Africa and would provide meaningful relief to the 2 500 taxi operators it finances.
Bridge Taxi Finance said it viewed the taxi industry as a critical component of the country’s economy as more than 70 percent of the workforce was transported to and from work by taxis daily. Raseroka said since the company’s inception, it had been Bridge Taxi Finance’s policy to not request payment from clients if they were not trading.
“We do not penalise or proceed against clients if they have a valid reason to not trade. We look at our clients’ recent taxi operations’ activity and the frequency of trading to determine if they have a valid reason not to pay instalments,” he said.
According to Bridge Taxi Finance, most of the taxi operators on its books had clocked up less than 50 percent of their normal mileage during the lockdown and carried restricted loads of less than 50 percent capacity. “Bridge Taxi Finance will settle 50 percent of the taxi operators’ finance instalments on their behalf.”
A so-called payment holiday of six months would on average add R311 000 to the total payment due by a minibus taxi operator and would add 21 months to the client’s payment term. “For new clients, the effect is even more severe, with an addition of more than R600 000 to the client’s total payment obligations as well as an extended repayment term of more than 42 months to settle the debt.
“Bridge Taxi Finance will backdate these support measures to the start of the lockdown in April and continue with them until the taxi industry is up and running, which is expected to happen at level 1 of the lockdown,” the company said.
Bridge Taxi Finance has committed a further R12 million to the provision of sanitisers to be retro-fitted into clients’ taxis and for the ongoing monthly sanitation of taxis.